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PSERS - How bad is the under-funding?

  1. Each current working PSERS member makes a one-time payment of $127,000 into PSERS

  2. Each PA school district makes a one-time payment of $62 million into PSERS

  3. Each individual retiree, survivor annuitant, or disability retiree forgoes all benefits for the next 6 years A final illustration of the poor health of the system ... cash benefits paid out each year are more than twice the cash contributions coming in from existing workers.  Therefore, in order to pay benefits, the pension fund has to liquidate investments every year.  The actuaries note in the annual report that PSERS net cash outflow is twice as bad as the average US state pension. What is even more discouraging is that this crisis was entirely avoidable.  Between 1997 and 2003, PSERS was over-funded, and at its peak was at 123.8%.  (See chart below, from PSERS 2013 annual report.)  Moreover, the pension fund is estimated to keep getting more and more underfunded until it starts to turn around in 2018.

  4. PSERS - An Emerging Problem

  5. What is PSERS

  6. PSERS - How are benefits earned?

  7. How is PSERS funded?

  8. How does pension valuation work?

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